Farm GrownFarm Grown

Chicken grows and processes chickens. Each chicken is disassembled into five main parts.

Farm GrownFarm Grown

Chicken is computing the ending inventory values for its July 31,

20172017,

balance sheet. Ending inventory amounts on July 31 are

2525

pounds of breasts,

66

pounds of wings,

44

pounds of thighs,

77

pounds of bones, and

33

pounds of feathers.

Farm GrownFarm Grown

Chicken's management wants to use the sales value at splitoff method. However, management wants you to explore the effect on ending inventory values of classifying one or more products as a byproduct rather than a joint product.

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(Click to view information on the sales value at splitoff method.)Read the requirements

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.Requirement 1. Assume

Farm GrownFarm Grown

Chicken classifies all five products as joint products. What are the ending inventory values of each product on July 31,

20172017?

(Round your answers to the nearest cent. Enter an amount for each product including zero balances.)

Product	Ending inventory value
Breasts	$10.30
Wings	0.82
Thighs	1.28
Bones	0.32
Feathers	0.14
Total	$12.86

Requirement 2. Assume

Farm GrownFarm Grown

Chicken uses the production method of accounting for byproducts. What are the ending inventory values for each joint product on July 31,

20172017,

assuming breasts and thighs are the joint products and wings, bones, and feathers are byproducts?

Begin by selecting the formula to calculate the joint costs to be allocated. Then enter the amounts and determine the amount. (NRV = Net Realizable Value.)

Joint costs

-

NRV of byproducts

=

Joint costs to be allocated

$70.00

-

$12.00

=

$58.00

Now use the table below to calculate the allocated costs per pound for the breasts and thighs. (Round the weights to three decimal places, the joint costs to the nearest cent and the allocated costs per pound to four decimal places.)

	Breast	Thighs	Total
Pounds of product	120	30	150
Wholesale selling price
per pound	$0.45	$0.35
Sales value at splitoff	$54.00	$10.50	64.50
Weighting: Sales value
at splitoff	.706	.137	.843
Joint costs allocated	34.89	1.31	36.2
Allocated costs
per pound	1.3956	.3275

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Reference

	Breast	Wings	Thighs	Bones	Feathers	Total
Pounds of product	120	45	30	90	15	300
Wholesale selling price
per pound	$0.45	$0.15	$0.35	$0.05	$0.05
Sales value at splitoff	$54.00	$6.75	$10.50	$4.50	$0.75	$76.50
Weighting: Sales Value
at splitoff	0.706	0.088	0.137	0.059	0.010	1.000
Joint costs allocated	$49.42	$6.16	$9.59	$4.13	$0.70	$70.00
Allocated costs
per pound	$0.4118	$0.1369	$0.3197	$0.0459	$0.0467

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Requirements

1.	Assume Farm GrownFarm Grown Chicken classifies all five products as joint products. What are the ending inventory values of each product on July 31, 20172017?
2.	Assume Farm GrownFarm Grown Chicken uses the production method of accounting for byproducts. What are the ending inventory values for each joint product on July 31, 20172017, assuming breasts and thighs are the joint products and wings, bones, and feathers are byproducts?
3.	Comment on differences in the results in requirements 1 and 2.

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